Bausman and fraud at Russia Insider? Lavelle blows the whistle

April 11th, 2016 ~ Fort Russ News ~

~ A Fort Russ Exclusive ~ FR Editorial Staff with Joaquin Flores ~

Fort Russ's exclusive investigation sheds light on the allegations of impropriety over at Russia Insider and the story behind it all

RT's Peter Lavelle, host of the station's flagship show "Cross Talk", sent shock-waves through the alternative media community on April 7th with a stunning revelation. He published a Facebook status which acknowledged what the Fort Russ team has been receiving information on for almost a year: the mounting controversies and possible evidence of fraud, impropriety, and the alleged lack of transparency of Russia Insider's owner and Editor in Chief, Charles Bausman. 

This is what Lavelle revealed on April 7th on his Facebook status: 

The concern which Fort Russ first made public in November of last year, that  Russia Insider was among “questionably financed and managed sites promising an ‘inside view of Russia’”, was echoed by Lavelle in his April 7th statement: “I too question the transparency and openness of the site’s management and the entire operation. There appears to be no accountability.”

Russia Insider has become a popular news content aggregator and permanent fundraising campaign, which reproduces news stories taken from other various websites sympathetic to Russian foreign policy.  Readers are asked to donate money for this content which is already readily available elsewhere for free, with the unremunerated costs of creating original content shifted onto other sites' writers. It is a very interesting business model which other popular alternative journalists have regularly criticized. This was not the model that Lavelle, nor most of the other volunteers and employees had in mind. Bausman had promised them, as well as the public, hard-hitting original and investigative journalism. This much failed to materialize, by and large. 

However, this only touches on the surface of the site's problems.

Charles Bausman

Soon after it debuted in September 2014, aiming to fill a void and engage in real journalism, it quickly became clear that Russia Insider was having some delay in hiring journalists. Instead, they quickly placed ads for professional fundraisers and marketers that could help increase the coffers of one of several LLC's, controlled by Charles Bausman - one registered in the US, named 'Insider Media LLC', and the other in the Russian Federation. LLC's are not non-profits, but are for profit limited liability corporations which indemnify the personal assets of its owners from claims or suits brought about by other parties, public and private.

While the legal implications are unclear to Fort Russ in relation to how the LLC's were used and structured between the US and Russia, any regular reader of Russia Insider could attest to their marketing strategy, which strongly implied that they were a non profit organization which used all donations on salaries for journalists. On their 'Support' page, they encourage tax-deductible donations of over $1000 to go to a certain "Consortium for Independent Journalists".

The "Consortium for Independent Journalists" is actually award winning journalist Robert Parry's organization, founded in 1995, and is connected with Parry's Consortium news. It would seem that Parry and Bausman had some arrangement for contributions containing the memo line 'Russia Insider' to be transferred to Bausman. Fort Russ cannot offer any statements of fact about the relationship between the LLC and the non-profit. nor about the legality of transferring funds from a non-profit over to a LLC, or directly to Bausman himself, if indeed that was the procedure.

The website consistently claimed that 100% of the proceeds went to 'journalists'. They misinformed the public that, "We'll only spend it on journalist salaries, nothing else. Period."

In the course of Fort Russ's investigation, it has been explained to us from people very close to the operation that the above claim does not have any merit. According to one anonymous source, formerly very close to this area of Russia Insider's scheme, none (or a negligible amount) of the money raised by Russia Insider was spent on what can properly be called 'Journalist salaries'.

According to this source, instead, Bausman brought in his then wife, and her brother; saying that his brother in law was brought in on paid salary in part because she had "child support payments to make". 

The source also explained that initially she had been very interested in working with Russia Insider, after being introduced to Bausman.  Bausman gave her the "whole pitch", and had intimate knowledge of the fundraising methods, but was shut out from any information about what was done after the funds were raised. Indeed transparency and communicating were always mysteriously lacking at Russia Insider, according to the source. She compared notes with another employee. 

What she told us is that things fell apart over the last two weeks when various employees and people working on the project started to share stories and corroborated things that Bausman had done and said to different people.  "And as far as not having meetings that was kind of a big deal with Charles, is that he didn't like the idea of having meetings, that it was so corporate, and he was all about this freedom of expression, and we just kind of coast along as we do."

It appears that Bausman had some plan that wasn't explained to the team at all. "But at the same time we were having trouble figuring out which direction we were trying to go. Especially as one of the founding members was asking, are we going into a sort of volunteer driven donation based project website? Media criticism? Or are we going into a, 'how much money can we raise from investors, and you know equity, and then an exit strategy and go public? Or fully become a media company? So a lot of this stuff was going back and forth, whether it would be in speeches, emails, different stories, crowd funding, you know, nobody really knew what the direction was. But we all trusted Charles to tell us what to do, you know, to point us in the right direction. 

Problems in transparency and a lack of good corporate governance really became more prominent. "And then he had his girlfriend at the time who he said, you know she's actually going to come on board, and she's gonna become our financial controller. You've got to be thinking to yourself, now that's got to be a conflict of interest."  

"We just started seeing our budget increase more and more. But donations and advertising revenue were staying the same. Our traffic was staying the same ... "

Another source who we reached out to, who also briefly was very close to RI's investor outreach operations, explained that there was at least at first, no actual legal entity called 'Russia Insider', there was the LLC which listed Russia Insider as an asset. This claim about the non-entity nature of Russia Insider is corroborated in the contract which Lavelle, earlier today, posted on Facebook.

Bausman falsely claimed, according to our sources, in attempting to push for investors, that the site was worth some $2 million dollars US, in a failed attempt to get about $300,000 poured in. This figure is about 5000% (five thousand percent) higher than what it is realistically valued at. The reality was that this was just a content aggregating website with little to no original content that was only getting about 20 to 25 thousand unique interactions a day. This is less than, for example Fort Russ, but the presentation of Bausman's site and the ongoing campaigning and public misrepresentations of growth certainly painted a different story. 

Robert Parry and the former employees are not the only legitimate journalists or media workers who were unwittingly brought into Bausman's "disingenuous scheme". When Bausman approached Peter Lavelle about the idea of starting a legitimate news website business, with a mission to counter the mainstream western media disinformation about Russia, Lavelle was understandably excited and supportive. He brought Bausman on his show to promote the new site, and gave Bausman access to air-time other shows as well as introducing Bausman to several of RT's most competent behind the scenes media workers. Some of these media workers were, according to them, lied to by Bausman about the nature of the organization, its status and purpose. There were no labor contracts for the 'employees', or financial statements of the sort that would indicate that Russia Insider was in fact an actual organization.

Peter Lavelle was contacted at the beginning by Bausman who had pitched the idea of Russia Insider to Lavelle, and offered Lavelle both 25% percent equity in the start-up, as well as other rights to purchase or sell parts of this non-entity.  This strange status helps explain the language written on the contract (published below) between Bausman and Lavelle, which unconventionally posits that Bausman "[H]ereby agrees that when a legal entity is formed for ownership of the Russia Insider [...] news site, and other related properties, that JC will transfer 25% of his shares of the [...]"

On April 11th, Lavelle made another major statement, directly accusing Bausman of fraud.

Lavelle was concerned with the operation's lack of transparency early on, being pushed to the side by Bausman who refused to discuss details and specifics with Lavelle after their initial agreement was made.  Lavelle's relationships was at arm's length, and was not privy to any of the fund raising campaigns, and his expressed concerns about those practices and the uses of those funds went unanswered for many months.   

We spoke to Lavelle earlier today, who gave Fort Russ this exclusive statement:

"My relationship with RI has essentially been negative, very negative. I got involved in the project because I truly believe Russia gets a bad rap in western mainstream media. I then believed Charles Bausman was of the same opinion. I went to great lengths to support RI and Bausman. I was also a significant shareholder. It was Bausman who suggested the number of 25%, not me."

Lavelle continues, "At the same time, Bausman acted in very secretive ways. He systematically cut me out of any meaningful interaction with the site or RI team. I agreed to stay on the sidelines – after all I had a share. He often said he didn’t like meetings. Now I think I know why – he told different people different things." 

"But that changed when the public started to support RI with cash. I never saw any legal documents about RI (beyond the shareholding agreement Bausman and I signed). I have no idea how contributors’ money was spent. I never saw a balance sheet. I began to believe that all money sent to support RI ended up in Bausman’s pocket. I think Bausman owes a lot people a lot explanations – he needs to step up and demonstrate he is honest and transparent." 

"And when it came to my share in RI, I have witness accounts how he habitually lied about this. This really angered me. I know others who worked with Bausman and RI who were left with very negative impressions. So many promises were made; so many promises broken. Bausman has exhausted my belief in him. His actions badly tarnish RI’s journalistic mission and the great hopes of alternative media.", Lavelle concluded.

Fort Russ has learned from a trusted source Bausman has reacted to people who are exposing his malfeasance with crude personal attacks. In one case an email sent to the parents of a former RI employee, in another case a phone call to the employer of an individual who has raised the flag of fraud. In both cases, Bausman does not want to answer questions regarding his fraudulent behavior – instead he relies on below the belt personal attacks.

As it turns out, the site boasting an original “inside view” seems to be having its own inside workings exposed. The endless bombardment of crowdfunding campaigns, donation requests, and Zvezda watches for cash promotions that flood the screen of any reader of Russian Insider, are being scrutinized for allegations of fraud. 

Peter Lavelle is only the latest and the most prominent voice of concern on this matter, as several have come before him, and other accounts are still surfacing. Be that as it may, the problem is now front and center: Russia Insider is being accused by fellow information warriors and honest audiences of impropriety.  

Their question is as honest as it is simple: “Where is my money going?” 

Such a common sense inquiry has reached the next level: is the media criticism crusader practicing the same lack of transparency that he himself claims characterizes western media?

To help answer that question, we also talked at length with the well known Russian-American geopolitical analyst, Andrew Korybko, who has contributed both to Russia Insider and Fort Russ, and knows Lavelle.  Korybko was offered a position and an 'opportunity' by Bausman to get in 'on the ground floor', and a work visa in exchange for free labor.  He was told by Bausman that while he couldn't be paid, that the idea was to build Russia Insider up and then sell it off to a wealthy investor, after which Korybko would be taken care of. Korybko gave us his take today:

"Russia Insider was not accountable to their crowdfunding supporters. They said before their first campaign that they would show how every dollar was spent. Instead, more than $60,000 later, not a single receipt has surfaced and nobody has any idea how much their staff members are even being paid. Looking at the public records from their crowdfunding campaigns, some numbers also don't add up, such as why some people would donate significant amounts of money that didn't correspond to any of their given "prize" amounts. Moreover, some people would repeat this donation pattern for no reason whatsoever, leading to the possibility that some accounts were being used to facilitate money laundering due to the "tax-free" status that the company publicized that they have.", Korybko stated.

He continued, "There's no smoking gun about whether "funny money" was moving in and out of the company, but the circumstantial case as evidenced by quite a few odd crowdfunding "donations" and the failure to account for even a single dollar's worth of funds is damning. Well, truth be told, donors did see what they got for their money though, as a former US military employee and current self-described lobbyist Jacob Drezin wrote a few original submissions that rival the worst of Anne Applebaum and Luke Harding's propaganda. While RI has on his profile that he's a "volunteer", this was added post facto after the controversies erupted about his anti-Russian and anti-Syrian propaganda. Even if this reprehensible individual was not receiving any money, the fact that he was given a platform on the site to spread his venom raises serious questions about the entire RI editorial process.", Korybko affirms.

Digging deeper, Korybko tells us: "The idea behind RI is honorable, but the execution is despicable and the reality failed to live up to the much-vaunted and hoped-for expectations. Some "good" came out of the initiative because of the community that it created and the popularization of some original analyses by Alexander Mercouris, Jon Hellevig, and others, but overall, this project has totally failed in living up to its "transparent" and "people not profits" motto, and for that reason, it can be seen as a fraudulent organization. The individual writers, contributors, and promoters are not to blame -- they were just as hoodwinked as I was -- but who needs to be held to account is Charles Bausman and his inner circle that deliberately mislead all of their well-intentioned supporters (both in-house volunteers and regular visitors)."

"They gave such a black eye to the whole idea of crowdfunded journalism that it will likely hurt legitimate projects that are trying to grow in its wake. I admittedly benefited from RI's platform of exposure but grew suspicious after I took the time to objectively assess everything going on with the company. The moment that I woke up was when they suddenly stopped republishing my articles and dragged their feet by ultimately never publishing a promotional article about my book, which eventually ended up going on to be quoted by NATO's Defense College as an authoritative Russian-based source on Hybrid War. Sensing some personal problem against me that was being manifested through passive aggressiveness, I thought long and hard about everything related to RI and came to the conclusions that I just shared with everyone. I wholeheartedly and fully commend Peter for bravely taking a stand and exposing the smoking gun that proves that RI was a fraud. It confirms what I and many others had suspected. I hope that a new and improved type of Russian-based crowdfunded journalism can emerge around Peter and that all of the innocent contributors and volunteers that had nothing to do with Charles' deceit can join him in rebuilding the dream that we all know is possible.", Korybko concludes.

Bureaucratic mishaps, disorganization, and a lack of a firm orientation are usually inevitable with popular sites at the start, especially when they skyrocket from such small beginnings. But Russia Insider is different. Firstly, it champions itself as a model of honest and grassroots journalism as a labor of love and conviction, rather than money. This is the point stressed in its numerous HD videos and non-stop advertisements clamoring for donations. Indeed, in the information war against NATO propaganda today, that “truth is on our side,” is one of the greatest merits, and therefore is not one to be taken lightly. Secondly, “questionable financing and management” are being exposed to be only part of the tip of the iceberg. 

This is quite unfortunate for the public. The rise and fall of Russia Insider seems rooted in focusing on 'best fundraising practices' and how to 'get rich quick' at the expense of long term credibility and reader dedication.

Last November, a few of our editors who had been receiving information from disgruntled donors and former volunteers, decided to take a critical look at Russia Insider's actual presentation and layout. Readers had started to complain that Russia Insider was not actually producing any original material, but was instead engaged in almost entirely a copy-paste operation taking from other sites. Visitors to the site were inundated with pop-ups which, when clicked closed by the visitor, only revealed a page smothered in e-begging videos and various campaign banners, ranging from Indie-Go-Go, Go-fund-me, to Kickstarter and more. At that time our editors took some snapshots of the 'Russia Insider' site as it appeared then.

This part of the front page, depicted above is what is known as 'above the fold'. This what people first see when they go to a site, without scrolling. Everything one can see in a normally open-sized browser window, is 'above the fold'. This is the first impression, and the most important one. It says who you are, what your stories are, what you're all about, and chiefly what's important to you. What is taking up 75% of the space, in four different 'asks' is the fundraising campaign. 

The only actual content we see is an article by John Pilger, published originally elsewhere and connected to Russia Insider in no way whatsoever.

Scrolling down the site to the second half, on the same sample day, was the below screenshot. It is evident that we see more of the same, with two more asks.  Readers may have a difficult time, now in retrospect, not finding the 'Keep the Media Honest' motto, which is another ask, a bit humorous or frustrating.  

This second photo is what we call below the fold or the 'bottom half'. However, on websites, its just the next chunk of page on the site, equal in size to 'above the fold'. While there's plenty below it, it also tells you a lot about the site. This is what only about 50% of readers are going to stop or focus on when they visit the site, before clicking on. The rest view above the fold, if not following a link to an actual article on Russia Insider.  

The iceberg that this Titanic may hit, however, is not the barrage of fundraising campaign popups and ads, profits of investors, media moguls, or military-industrial propagandists. After all, even if Russia Insider is being managed as if it were going to be squeezed for cash like a corporate scheme, the people being alienated are the millions of ordinary people eager to escape the Western media blockade who look up to such sites as Russia Insider. Also left out in the cold are those ordinary volunteers, supporters, and associates who have spent time with RI only to leave frustrated or shoved out for asking too many questions. The Russia Insider readership is not only having its trust violated, but the very practice of “philanthropy” in information war initiatives is being soured for everyone. 

Russia Insider seems to actually not involve anything like the 60 volunteers they boast, but rather three or four people at most whose main job seems to be scraping stories from the internet, and copy and pasting them to the site. What this has nothing to do with is 'citizen journalism', or even journalism at all. Even Fox News and the BBC make their own stories half of the time.

An individual who is involved in running one of the Saker websites told us: "Right as RI was getting going, this Charles Bausman found me on Skype, and started to chat me up. He gave me this Ghandiesque story about whirled peas and the like. Then he asked if I could send him my list of translators. Seemed like a genuine guy. So I did. Never heard from him again. I asked what happened, no response"

Another gentleman, who was involved at the ground-floor and was promised big things by Bausman says: "They said this was going to be real big. Said they couldn't pay me, but that someone probably was going to buy it out once it got big, then we'd all get something big too .... I remember one time I was accidentally copied on an email, they were upset about something. They had bought a bunch of fake followers from Facebook, they were all Indian or something, and they were saying 'wow' they had spent this money and the followers are useless."

The 'ground floor' insider also told us: "Their model is a failure. With all the pop-ups asking for money, and click bait, copy and paste articles -- when they do try to break a story, it's a total failure. They are not able to break an actual story through all their own self imposed clutter and ads"

Out of 49 articles which appeared on their front page on our sample day in November 2015, 10 of these are either original translations from Russian articles or blurbs written by 'RI Staff'. These blurbs are about 50-75 words, and were in fact little more than a caption with a photo that accompanies a click-bait headline. The model of the site is clear. 

At the end of the day, these problems with content and presentation are not a good model in the long term, but certainly to not indicate that there is any impropriety. But what it highlights is the way that even where money could have been spent, regardless of transparency or good corporate governance issues, it was not. 

The total amount of money raised by Russia Insider through paypal is still not known to us at the present time, but with several public campaigns that showed crowd funding figures in excess of $60k, its likely that this number is close to $100k.

This scandal and the desertion of much of the more capable staff of Russia Insider, has likely left Bausman without a ready machine to handle the, yes, next fundraising drive planned for this Spring. People who had previously given money or who were otherwise on the RI mailing list, received this strangely worded picture message earlier today at about 15.00 hours, GMT.  

Entirely separate from the campaigns was money taken from investors. With Bausman having placed his wife (or girlfriend, depending on the account) at the head of finances, creating the appearance of a conflict of interest, it will likely require a suit with a discovery process, or charges stemming from the proper authority in Russia or the US (as there are LLC's in both countries), to determine exactly how much is allegedly hidden, and where.

At the end of the day, the apparent mismanagement at Russia Insider will sour readers everywhere. In combination with what has been explained to us as the complete lack of corporate governance structures in place, and the never ending fundraising campaigns that abused and tarnished the very idea of crowd funding with integrity, this entire scandal has dealt a serious blow to alternative media everywhere.

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